Picture-Getty ImagesNew Delhi: India has overtaken China to top AT Kearney's Global Retail Development Index (GRDI), a study which ranks the top 30 developing markets for retail investment, riding on the back of favorable foreign investment environment, strong economic growth and a consumption boom that are expected to double organized retail and expand online retail by 30 percent a year to reach $48 billion by 2020.

India managed to score 71.7 points leaving China in the process which got 70.4 points. Malaysia, Turkey and UAE constiute the top 5 countries in the GRDI.

Mobile shopping grew last year by 121 percent in India, 192 percent in China, 151 percent in Vietnam and 87 percent in Nigeria, said the study. According to the study, online retail is projected to grow 30 percent annually and reach $48 billion by 2020, driven by high promotional activity and payment solutions such as cash on delivery.

The condition for retailers in India are favorable and will continue to provide strong fundamentals, the study said. The GDP is forecast to grow 7.4 percent in 2017 and 7.6 percent in 2018, which is helping boost the middle class and increase consumer spending beyond the essentials. These trends are expected to help organised retail double in size by 2020, the study said.

It also said that the government is taking steps to eliminate the federal and state rules that curtail retail development and new regulations are being developed to attract investment and increase consumption.

The study noted that relaxed rules for foreign direct investment (FDI) in key sectors have improved the ease of doing business in India. In the past year, the government has allowed 100 percent foreign ownership in B2B e-commerce businesses and for retailers that sell food products manufactured in India. Government effort to boost cashless payments and reform indirect taxation with a nationwide goods and services tax (GST) are also expected to accelerate adoption of modern retail in India.

"The enthusiasm around the initial public offering of DMart, one of India's most profitable food and grocery chains, shows that modern retailers are well positioned for profitable growth. This environment has propelled India to the top spot in GRDI."

In 2016, as consumers showed increased interest in brands, prominent international retailers entered the market, including Armani Exchange, Cole Haan, Heatwave, Muji, Massimo Dutti, Kate Spade and Neil Barrett. H&M has opened 15 stores within two years of entering market, Xiaomi intends to roll out single brand retail stores across the country.

"World's largest furniture retailer, IKEA plans to invest $1.56 billion to set up 25 stores nationwide. Amazon and Walmart have aggressive rollout plans with Walmart aiming to open 50 cash and carry storesin the next four to five years. The luxury sector also continues to see activity with Saks Fifth Avenue reportedly in talks with local partners to open two stores." Lifestyle retailers such as Shoppers Stop are investing in omi-channel offerings to meet the demand for online.

"However maintaining a profitable online operations is a challenge and hed led to some consolidation. Two of nation's largest online retailers Flipkart and Snapdeal are considering a merger as investors look to lock in returns, cut losses and focus on sustainable growth," the study said.